Many Coal-Fired Power Plants Poised to Retire, Group Says

By Mark Drajem -
Nov 13, 2012

Southern Co. (SO) and other U.S. utilities could retire as many as 353 coal-fired electricity units as the costs of installing pollution controls on those plants won’t let them compete with cheaper natural gas and wind power, an environmental group said.

The Union of Concerned Scientists said in a report released today that an additional 59 gigawatts of electric generating capacity from coal plants could be shuttered, representing more than 6 percent of all U.S. electricity used. Those changes are warranted because many of those rarely used plants have already outlived their 30-year lifespan and generate the most emissions of harmful pollutants and greenhouse gases, the report said.

“Spending billions to upgrade old coal plants may simply be throwing good money after bad,” Steven Frenkel, director of the group’s Midwest office and a co-author of the report, said in a statement.

The future of coal has taken on greater commercial and political overtones as executives and lobbyists complained of a “war on coal” by President Barack Obama. Obama’s Environmental Protection Agency instituted new regulations on pollution from coal-fired power plants and proposed the first-ever greenhouse-gas rules, which would prohibit construction of plants that lack new and expensive carbon-capture technology.

Murray Layoffs

Robert E. Murray, chairman and chief executive officer of closely held Murray Energy Corp., fired 156 people the day after the election. He issued a notice to employees in which he asked for God’s forgiveness.

Southern Co., which the report said has more facilities “ripe for retirement” than any other utility, has lobbied against the EPA’s new rules on coal plants, while also cutting by half the share of coal-fired power it produces.

“We are committed to finding real solutions to provide for America’s energy future,” Tim Leljedal, a spokesman for the company, said in an e-mail. “The United States controls 28 percent of the world’s coal reserves, so it is important to find a way forward for coal in our country.”

Closing Plants

The Union of Concerned Scientists, based in Cambridge, Massachusetts, said in its report that coal has become uneconomic at many power plants because of cheap natural gas prices and the cost of installing modern pollution controls on decades-old plants. Already, power producers have announced the closing of 288 generating units, representing 41 gigawatts of capacity, it said.

Depending on the price of natural gas and decisions by regulators, lawmakers and federal officials, the number of closed units could more than double, the group said. The announced and anticipated plant closings produced just 10 percent of all the nation’s electricity in 2009, it said. More plants would be shuttered if Congress enacts a tax on carbon, or natural gas stays cheap, the group said.

By ramping up the usage of natural-gas plants, the power supply “would be adequate in every region of the country,” the report said.